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Airbus deal: SriLankan works out compromise
The debt-ridden national carrier SriLankan Airlines has re-negotiated the termination of the three A 350 Airbus lease contract with one of the world’s largest airline leasing company, AerCap as they were not suitable for existing routes and too expensive to maintain, officials said.
The leasing company has agreed to reduce the termination fee to US$98 million from $154 million, a top Sri Lankan Airlines official who wished to remain anonymous told the Sunday Times.
He explained that the re-structuring of the airline (including sorting out the termination leases) would have been delayed as a result of not accepting this offerand a default situation would arise leading to a court case.
This would further delay the re-structuring of the airline and jeopardise the Expression of Interest process (EOI) and this situation should be avoided, he added.
The Public Enterprise Development Ministry and the Treasury were of the view that the termination fee was too high and the maximum fee should be in the region of $75 million to $85 million as agreed by the Cabinet Committee on Economic Management (CCEM).
Meanwhile, Public Enterprises Minister Kabir Hashim has told the CCEM that an offer had been received to buy the three aircraft outright and sell them for $330 million to another company.
However, AerCap the owner of the aircraft has refused to sell them and the Finance Ministry and Public Enterprises Ministry then agreed to contact this leasing firm and re-negotiate the deal directly with it.
One of the A350 aircraft has already been off-loaded with a penalty of $17.5 million.
Four other A350 aircraft that SriLankan Airlines was to take delivery of in 2019-2020 would be cancelled by the Government, Prime Minister Ranil Wickremesinghe said in April.
Seven A330 aircraft and eight A350s were ordered during the previous regime in a $2.6 billion deal.
Of the A330s one aircraft has already been vested in Pakistan International Airlines (PIA) with two more to follow in the coming months.
Sri Lankan has ordered up to eight A350s with three due this year, one next year and the other four from 2020 onwards.
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